Hedge Funds Are Buying Up Gold ETFs, Should You?

ETF Database submits: Despite a relatively solid earnings season, anxiety continues to run high on Wall Street as elevated unemployment and sagging confidence stand as major obstacles to a continued economic recovery. As equity markets trend sideways and potential pitfalls materialize, many investors have moved slowly towards safe havens, preferring to watch from the sidelines until the storm clouds clear. Government bonds have been a popular choice, but record demand for these securities has driven prices up and yields down to near-historic lows. The combination of these paltry yields have and record budget deficit levels have sent many investors into precious metals, traditionally a calm harbor during rocky economic times. It isn’t just the cooky conspiracy theorists who are flocking to precious metals; investments in gold are a popular choice for some of the world’s most famous fund managers. According to recent 13F filings, demand for gold ETFs, particularly the SPDR Gold Trust (GLD), has soared in recent months among top hedge fund firms. Eton Park Capital Management revealed that it has about $800 million in GLD, while the legendary George Soros has a position of about $600 million. Not to be outdone, John Paulson’s fund maintains a $4 billion allocation in GLD, making his fund the single largest holder of State Street’s gold trust. That means that Paulson’s stake in GLD is as almost as large as the other two physically-backed gold ETFs (IAU and SGOL) combined.Complete Story »

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Insider Monkey submits:
Analysts and traders are extremely bullish about gold. Rising inflation, the decline in the US dollar, and ultra-low interest rates created the perfect environment for gold to flourish.

Michael Johnston submits:Perhaps no corner of the ETF market has exploded as rapidly as the precious metals space, as the democratization of an asset class previously off limits to many investors has resulted in billions of dollars in cash inflows. The SPDR Gold Trust (GLD) is now the second-largest ETF by total assets, with more than $53 billion under management.

ETF Database submits: ETF Securities, the European-based ETF issuer famous for its lineup of physically-backed precious metal ETFs, announced further expansion of its product offering with the launch of an ETF that holds physical gold bullion in Singapore, the ETFS Physical Asian Gold Shares Trust. The new fund will trade under the symbol AGOL and will charge investors a competitive 39 basis points for its storage fees.

ETF Database submits: As the American economy continues to tread water, many investors have grown increasingly concerned about a double-dip recession. This has pushed dollars into the bond markets which has caused prices to soar as investors attempt to protect themselves from any future economic storms. However, with yields now approaching record lows, investors have started to rethink this move into bonds, especially considering the dire fiscal position that most governments find themselves in.

Ron Rowland submits:I previously wrote an article entitled PHYS: Now You Can Store Your Gold in Canada. After discussions with Michael Traynor of the National Stock Exchange, I agree with their conclusion that PHYS is not an ETF.